Documents that Each Borrower Must Submit with its PPP Loan Forgiveness Application
A borrower must submit the Application for Forgiveness to the lender that is servicing the loan, and include the following:
Documentation verifying the eligible cash compensation and non-cash benefit payments from the Covered Period or the Alternative Payroll Covered Period consisting of each of the following:
- Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees.
- Payroll tax filings reported to the Internal Revenue Service and state income, payroll and unemployment insurance filings, verifying the number of full-time equivalent employees on payroll and pay rates for the following periods:
- The 8-week covered period of the loan,
- February 15, 2019 through June 30, 2019 or January 11, 2020 or February 29, 2020, depending on the dates used to measure any drop in employees or salary as required by Section 1106(d)
- In the case of a seasonal employer, February 15, 2019, through June 30, 2019,
- The last full quarter prior to the covered period,
- February 15, 2020 through April 27, 2020.
- Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the Borrower included in the forgiveness amount (PPP Schedule A, lines (6) and (7)).
Full Time Equivalent (FTE)
Documentation showing (at the election of the Borrower):
- The average number of FTE employees on payroll per month employed by the Borrower between February 15, 2019 and June 30, 2019;
- The average number of FTE employees on payroll per month employed by the Borrower between January 1, 2020 and February 29, 2020; or
- In the case of a seasonal employer, the average number of FTE employees on payroll per month employed by the Borrower between February 15, 2019 and June 30, 2019; between January 1, 2020 and February 29, 2020; or any consecutive twelve-week period between May 1, 2019 and September 15, 2019.
The selected time period must be the same time period selected for purposes of completing PPP Schedule A, line 11. Documents may include payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941) and state quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state. Documents submitted may cover periods longer than the specific time period.
Documentation verifying existence of the obligations/services prior to February 15, 2020 and eligible payments from the Covered Period.
- Cancelled checks, payment receipts, transcripts of accounts, or other documents verifying payments on covered mortgage obligations, payments on covered lease obligations, and covered utility payments, and
- Certification from a representative of the eligible recipient that the documentation presented is true and correct and the amount for which forgiveness is requested was use to retain employees, making interest payments on a covered mortgage obligation, make payments on a covered return obligation, or make covered utility payments, and
Documents that Each Borrower Must Maintain but is Not Required to Submit
PPP Schedule A Worksheet or its equivalent and the following:
- Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 1, including the “Salary/Hourly Wage Reduction” calculation, if necessary.
- Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 2; specifically, that each listed employee received during any single pay period in 2019 compensation at an annualized rate of more than $100,000.
- Documentation regarding any employee job offers and refusals, firings for cause, voluntary resignations, and written requests by any employee for reductions in work schedule.
- Documentation supporting the PPP Schedule A Worksheet “FTE Reduction Safe Harbor.”
Documentation Retention and Availability
All records relating to the Borrower’s PPP loan, including documentation submitted with its PPP loan application, documentation supporting the Borrower’s certifications as to the necessity of the loan request and its eligibility for a PPP loan, documentation necessary to support the Borrower’s loan forgiveness application, and documentation demonstrating the Borrower’s material compliance with PPP requirements. The Borrower must retain all such documentation in its files for six years after the date the loan is forgiven or repaid in full, and permit authorized representatives of SBA, including representatives of its Office of Inspector General, to access such files upon request.
Many accounting systems (including the most popular, QuickBooks Online) offer the ability to attach support documents directly to expenses. This could be an easy way to document copies of invoices, receipts and checks required to be retained to document forgiveness.
All eligible recipient requesting forgiveness will be required to submit the above documentation to their lender. The lender is allowed 60 days after the date that the application is received from an eligible recipient to issue a decision on the forgiveness application.